November Canola

[Guest]

Farmaholic, do you have a 13bpa ACT Of God contract with your specialty canola? (I believe that’s what Nexera is but unsure about Cargill program)

The November futures hit $500 for about 2 days in the winter, hopefully it gets back there.

bunge nexera has 10 bpa you can price with AOG
richardson had $10.50 for canola today immediate delivery

[farming101]

Palm is driving soy is driving canola.
Talk of steady business to Europe. Europe canola imports from Canada really took off in 2019.

November may back off here. Staying above 476 or so could set up another chance for a bit higher prices.
Did some old crop 15.50 under Nov for August del. picked up.

[Oliver88]

November finally broke $490

[Maver]

November finally broke $490

Of course it did. I emptied the bins last week.

[farming101]

A little bit of what's going on. Mallee posted about it in the US wheat thread.
That's 1238.90 USD for September(I think) delivery. The high price of the day.
1656.06 CAD.
May shipments of crude Canola oil to China from Canada were 983.86 CAD Vancouver
Looks like some good business to be done for someone.

[farming101]

Very strong price action today. Volume wasn't fantastic though, so still caution needed.

I would be looking at Errol's suggestion of Jan puts

[malleefarmer]

Domestically here canola not used to much in feed rations but some is needed.

See local mill is $670 delivered.

Guessing they only need a 2 or 3 hundred tonne but must be short in supply that’s good coin

[jazz]

I wouldnt be tempted by that Nov contract. The canola crop is going to come in short this yr. Too much moisture in some areas, lacking moisture in others and now flower blasting and lygus bugs having a field day.

[Oliver88]

Very strong price action today. Volume wasn't fantastic though, so still caution needed.

I would be looking at Errol's suggestion of Jan puts

Can you of Errol elaborate on January puts?
Future price is approaching $500.

[errolanderson]

Can you of Errol elaborate on January puts?
Future price is approaching $500.

Oliver . . . we bought Jan 500 (in-the-money) puts for $15.80/ MT today. Jan strike $500 - put premium (say $16/mt) for easy math = $484/MT ($11/bu) - your fall delivered basis. Advantage of Jan is it expires around Xmas. This allows the grower to watch for a narrower post harvest basis. Also, no production or delivery obligation. Pure ol insurance that the grower can manage without risk of cash contract payout penalty.

Note: Given the strong close today, these options may be cheaper tomorrow. But don’t nickel and dime this market as canola could suddenly drop once current sales are covered.

Puts are an added tool for a producer’s marketing toolbox. Part of a risk management plan. Hope this is useful.